“He that is without sin among you, let him first cast a stone”. Good advice; but it clearly doesn’t apply to the corporate sphere. I can’t remember the point at which the suitably woolly stakeholder principle gave way to environmental, social and governance (ESG) mandates, but we even seem to have moved on a notch from there. No reasonable person would take issue with many of the aims behind said mandates, but I don’t think that they would feel altogether comfortable with corporations which feel justified in taking on the role of our moral arbiters.
It has emerged that Ben & Jerry's, the ice cream manufacturer owned by Unilever (ULVR), has decided that it will stop selling ice cream in Jewish settlements in the disputed Palestinian territories, a move which has sparked outrage at the highest levels of government in Israel. Over half-a-million Jewish settlers now reside in areas of the West Bank and East Jerusalem annexed by Israel following the ‘Six-Day War’ in 1967.
Now you can argue – as many have – till you’re blue in the face over the legality of Israel’s actions in the disputed territories, but if I were a shareholder in Unilever I would be more concerned over management’s fiduciary responsibility to me, and whether it is supporting contentious trade boycotts at my expense.
When the company’s founders Ben Cohen and Jerry Greenfield sold out to the Anglo-Dutch conglomerate in 2000, they pledged that the company would continue to adhere to its tradition of social engagement and activism, and have subsequently unfurled the Occupy Wall Street banner, and jumped on any/every high-profile bandwagon that’s doing the rounds.
But it’s hard to be good all the time. At the time of the deal I doubt if the founders were quite so concerned about Unilever’s then-status as the world’s largest end-user of palm oil, a food/personal products input derived from an agricultural industry with highly questionable environmental credentials. In fairness, Unilever has subsequently taken a stranglehold on the Global Dow Jones Sustainability Index, but I wonder if the two superannuated hippies gave a moment’s thought to the welfare of orangutans when the $326m (£235m) deal was going through.
It’s not just Ben and Jerry’s, though. Blue-chip corporations are now routinely weighing in on public policy issues, thereby diverting shareholder capital to causes and movements that the actual owners may never have supported in a month of Sundays. Bizarrely, in the US and elsewhere, we are now witnessing widespread corporate support for movements that share an avowed aim of dismantling capitalism as we know it. Perhaps it gives some board members a warm, fuzzy feeling inside, but I doubt if it’s in the best interests of shareholders.
And aside from any negative implications for earnings, it’s the sheer hypocrisy that rankles. Last year it was reported that several US blue-chips, including prominent names in sports footwear and carbonated beverages, had actively lobbied the US Congress to water down provisions within the Uyghur Forced Labor Prevention Act. It’s enough to make you choke on your Häagen-Dazs.
